(Bloomberg) — Italian companies see the economic situation in the country deteriorating, according to a central bank report.
Most Read from Bloomberg
Spiraling inflation and uncertainty linked to Russia’s invasion of Ukraine means firms are now the most pessimistic bout their own businesses since the first quarter of 2020, according to the Bank of Italy report based on information gathered between Aug. 15 and Sept. 15. Companies also said they were reducing their investment plans.
Inflation expectations have also increased, with entrepreneurs predicting inflation will be at an average 7.5% in six months and remain above 5% even in a two-to-five-year horizon, the study showed.
Italy’s finances are set to be strained in the foreseeable future as the energy crisis continues to hurt families and businesses forcing the government to increase fiscal aid. So far, the government has spent 66 billion euros ($64 billion) to protect its economy and more will likely be needed.
That will make the job harder for Giorgia Meloni, leader of the right-wing coalition that won elections and is preparing to take office in the next few weeks. She will face an economic environment where growth is slowing and servicing debt is becoming more expensive as the European Central Bank raises rates.
The government currently predicts the economy will growth 3.3% this year, but just 0.6% in 2023. The projection is a huge downgrade from the 2.4% growth prediction made in April.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
